Tax bill leaves Pennsylvania woman with $36 million 'headache'

Friday

“I was terrified that I was going to lose everything,” Kaitlyn Therasse said.

ERIE, Pa. — Kaitlyn Therasse began to cry when she opened a notice that arrived in the mail in June.

She thought the bill from the IRS said she owed $36,000 to the federal government — a far greater amount than she could afford.

When she called the IRS, the woman on the other end of the line corrected her, Therasse said later. She’d read the notice wrong.

She didn’t owe $36,000.

She owed $36 million.

“I broke down again,” Therasse said in an interview. “I was like, I have no idea what I can do to make this straight.”

The tax bill seemed like an obvious mistake. Therasse, 29, lives in a small but comfortable home in Millcreek Township with her two young children. She works as a surgical assistant.

After nearly a year, Therasse finally has the problem fixed. But while she was still working to resolve the issue, the IRS put a lien for $36,074,282 on her property in October.

“I was terrified that I was going to lose everything,” she said. “I didn’t know what I was going to do. I thought I was going to jail.”

The lien was lifted in late April, according to court records.

The IRS would not comment on Therasse’s case and said it is prohibited from commenting on any specific taxpayer information under federal law. For that reason, it’s not clear what caused the problem with Therasse’s taxes.

She suspects, though, that it had to do with an inheritance she received from her great-grandparents in 2015. The $36 million tax bill showed up in 2018, but it was for the 2015 tax year, according to records Therasse showed the Erie Times-News.

The inheritance was nowhere near enough to leave Therasse owing $36 million in taxes, she said. Therasse thinks there must have been some major confusion over the amount of the inheritance.

“Somehow the numbers got completely messed up,” she said.

Therasse said the amount she owed the IRS continued to climb and accrue interest as she worked to resolve the problem, eventually reaching more than $40 million. The IRS kept her tax refund for 2018 and applied it toward the multimillion-dollar debt, she said.

“It was the biggest headache that I have ever had,” she said. “I would be up nights on end just crying because I thought they were going to take my kids away because I would lose my home.”

An error of that magnitude is “unheard of,” said William Finnecy, a tax partner at the Erie office of the national firm BKD LLP. Finnecy did not work on Therasse’s case.

“It is very rare,” Finnecy said. While the IRS does make mistakes, it’s more common to see issues that are caused by taxpayer errors, he said.

The best way to avoid those mistakes are to file your taxes electronically, he said, or to use a qualified tax preparer. The IRS also recommends filing electronically to avoid common taxpayer-generated errors.

If you believe there’s been a mistake on your taxes, address it right away, and if you use a tax preparer, bring it to their attention immediately, Finnecy said.

“It’s best to communicate with (the IRS) immediately and then follow up in writing about that communication,” he said.

Therasse said she contacted the IRS after receiving the notice in June and later consulted with a lawyer who helped communicate with the IRS on her behalf. She also worked with a taxpayer advocate who was assigned to help navigate her case, she said.

The taxpayer advocate called Therasse in April, she said, to let her know the case was resolved.

“I’m very glad it’s over,” Therasse said.

Therasse said she never received an apology or any acknowledgement that there was a mistake on her taxes from the IRS. She’s still frustrated about the time she spent waiting on hold — she estimates it was about 35 hours in all — to solve a problem she believes she didn’t cause.

“I was relieved that everything was taken care of, but I was a little upset still that I went through all of this for nothing,” she said.

Despite all that, she can laugh about the situation now. Her $36 million headache is resolved and her refund finally arrived in the mail.

“Everything is all taken care of,” she said. “They actually owed me a refund.”